What is the test for dismissing a case for lack of subject matter jurisdiction?

2 Frigard v. United States, 862 F.2d 201, 204 (9th Cir.1988) ("Ordinarily, a case dismissed for lack of subject matter jurisdiction should be dismissed without prejudice so that a plaintiff may reassert his claims in a competent court."), cert. denied, 490 U.S. 1098 (1989); Watkins v. Lujan, 922 F.2d 261, 264 (5th Cir.1991) ("While a court must dismiss a case over which it has no jurisdiction whenever a fatal defect appears, leave to amend defective allegations of subject matter jurisdiction should be freely given.").